Current low flat steel prices are unsustainable for producers in the long term, according to Antonio Marcegaglia, chairman and CEO of Italy’s Marcegaglia Group.
“If we consider the trend on raw materials in the near future, plus minimum rewards and margins for the mills in order to sustain the large capex the industry as a whole has to tackle, think we would need something like a Eur100/mt ($111.78/mt) increase, from the today’s lowest level,” Marcegaglia told S&P Global Commodity Insights Sept. 26 on the sidelines of Siderweb conference in Vicenza. The conference is held ahead of Federacciai annual meeting.
Platts, part of Commodity Insights, assessed Italian hot-rolled coil Sept. 26 at Eur540/mt base ex-works, down Eur5/mt on the day, and down Eur145/mt since the beginning of the year. HRC Ruhr was assessed at Eur545/mt, stable on the day, but down Eur145/mt since the beginning of the year.
Marceaglia Group is likely to close 2024 with 5%-6% lower steel sales compared with 2023, when it posted Eur8.11 billion in sales, due to overall weak global demand, Marcegaglia said.
“This is more or less what we forecast,” he said. “Price-wise, we have seen a decrease in prices, so also the profitability will be lower, but considering the overall market situation I think we still do OK.”
While the stainless steel market did not start well at the beginning of 2024, they did not do too badly in the middle of the year, he said. On the contrary, the plate segment did well in H1, but was now slowing down.
Commodity steel products in general had been more under pressure, Marcegaglia added.
Marcegaglia Group recently bought Outokumpu’s stainless longs assets and Ascometal Fos Sur Mer, making the company the largest worldwide re-roller and forwarding its strategy to have partial integration upstream.
“This, I think it’s a wise move considering the more difficult international supply chain, the lead time, the duties, the CBAM (the EU’s Carbon Border Adjustment Mechanism) and of course, the low CO2 footprint regulations,” Marcegaglia said.
Overall, the company has been progressing with improvements in terms of efficiency and investment, he said.
In the UK, Marcegaglia Group bought a new electric arc furnace in July that would come online in a couple of years, with Marcegaglia saying the company was looking into a “significant” project to add capacity for a bar mill, mid-bars and big bars at its Fagersta, Sweden, wire rod mill. The project is under study, but was quite likely to happen, he said.
“We are going probably to decide in the next month and then the implementation will be in 15-18 months,” Marcegaglia said.
In Sweden, Marcegaglia produces around 60,000 mt of wire rod and aimed to double its total production with the bar and stainless wire rod production.
In Ravenna, Italy, where Marcegaglia’s mill site has production capacity of 3 million mt/year of steel products, the company is investing roughly Eur35-40 million yearly on various projects, including logistics, Marcegaglia said.
“The significant project we’re talking is now a complete automation of the handling of the coil from when it arrives,” he said. “We are about 40% done with that project,” he said. “So it will take another two, three years, by steps, but that’s one example of improvement and digitalization.”
